For hospitals,contractual adjustments to 3rd party payers,such as insurance companies,are recorded with a debit to Contractual Adjustments (a contra-revenue account)and a credit to an allowance for contractual adjustments.

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This is the correct accounting treatment for contractual adjustments made to 3rd party payers by hospitals. The debit amount is recorded under the contra-revenue account called Contractual Adjustments, while the credit amount is recorded under the Allowance for Contractual Adjustments account.

For Hospitals,contractual Adjustments to 3rd Party Payers,such as Insurance Companies,are